More than 75% of the votes were cast in favor of the deal in which SWS Group (SWS+0.6%) shareholders will receive $1.94 in cash and 0.2496 shares of Hilltop Holdings (HTH+2%) for each share of SWS they own. Judging by the share price reaction, Hilltop investors think they're getting a bargain.

To review: SWS in April agreed to a sale to Hilltop Holdings (NYSE:HTH) in a stock and cash deal valued at $7.14 per share based on last night's close (it was valued at $7.88 at the time of the agreement). Lone Star and a number of other investors believe this undervalues SWS Group.

The proposed sale to Hilltop Holdings (NYSE:HTH) "deeply undervalues" SWS Group (NYSE:SWS), says Lone Star, which reserves the right to take any actions necessary to protect shareholder interests. In the event the merger is not consummated, Lone Star intends to nominate its own slate for the board to facilitate a sale to the highest bidder.

Hilltop Holdings (HTH-6.5%) tumbles after reporting Q1 EPS of $23.8M or $0.26 per share, missing estimates and comparing to $32.4M and $0.39 one year ago.

Noninterest income of $170.1M fell 20.2% from a year ago thanks to the mortgage slowdown. Noninterest expense of $212.6M fell just 1.1% as the synergy benefits from the First National Bank acquisition are just beginning to get going.

As for the next acquisition, SWS Group (SWS-4.3%) trades down all the way to $7.20 per share thanks to the cash and stock nature of its sale to Hilltop. Based on Hilltop's March 31 close, the deal was worth $7.88 per share to SWS owners. Hilltop: "We also continue to be excited about our proposed acquisition of SWS."

The boards of both companies have agreed to the deal in which Hilltop Holdings (HTH) will buy SWS Group (SWS) for cash and stock currently valued at $7.88 per share. SWS owners will receive 0.2496 shares of Hilltop and $1.94 of cash for each share of SWS they own. The deal is expected to close by the end of the year.

Hilltop had previously bid $7 for SWS, but was topped in February by Esposito Group's $8 bid. It remains to be seen what SWS owners think about the current deal. The stock is ahead 9.8% in premarket action to $8.21 per share, giving a pretty good idea that $7.88 is not the finally resting place for this sale.

SWS Group (SWS) confirms it received an unsolicited $265M buyout offer by privately held Esposito Global; SWS shareholders would receive $8/share in cash, trumping a Jan. 9 offer by Hilltop Holdings (HTH) of $7/share, half in cash and half in HTH stock.

SWS says it will consider both proposals to determine the course of action it believes is in the best interests of the company.

SWS +3.5% in regular trading after news of the offer broke near 10:30 a.m.

SWS Group (SWS) +9.4% premarket after rejecting Sterne Agee's latest bid for the company, calling it "highly conditional and opportunistic." Sterne Agee had raised its original offer of $6.25/share for SWS by 20% last night. (PR)

|May 4, 2011, 9:09 AM

Mar. 18, 2011, 2:38 PM

SWS Group (SWS+2.2%) rejects Sterne Agee's unsolicited $6.25/share takeover offer as it "substantially undervalues" the company, and the "highly conditional proposal" fails to address important regulatory requirements and financial commitments. Shares had surged 24% yesterday on news of the offer. (PR)

|Mar. 18, 2011, 2:38 PM

Mar. 17, 2011, 2:39 PM

SWS Group (SWS+25.1%) confirms that it received an unsolicited conditional proposal from Sterne Agee to acquire the company for $203M, or $6.25/share. The transaction would double the firm and create one of the largest regional financial advisers in the U.S. (PR)